Politics and Business within International Business

Politics and Business

Often there are decisions made by governments which effect international business sometimes in a very big way. Some countries put pressure on others to make political changes, which benefit the pressurising countries. There are sanctions which aim to stop businesses trading with these countries, by importing or exporting goods to and from them. Sanctions may only be put on some forms of trade or used to completely cut off trade with a country. These sanctions can be enforced through legal channels with an organisation such as the UN or EU for example.

Some examples include:

The End of the Apartheid System in South Africa

To end the apartheid system there were sanctions in South Africa, this is a link to further reading into the end of the apartheid system of South Africa:

http://www.fsmitha.com/h2/ch34-sa.htm

This is a link to a paper by an American university, which looks at the effect that the sanctions had on the apartheid:

http://www.econ.yale.edu/growth_pdf/cdp796.pdf

Proposed sanctions against Israel to stop its actions against Palestinians in Gaza

The sanctions which are being suggested against Israel are in an attempt to prevent them from being capable of terrorising Palestinians as their economy would feel the effect of the sanction as trading ceased with them and the world. This is a link to a news article which calls for sanctions to be put up against Israel:

http://www.imemc.org/article/57823

Sanctions against Cuba by the US

In cuba, when castro was in power the US put up sanctions against them to combat communism. Before the sanction two-thirds of Cuba's trade was with the US, so when the sanction came into place in 1962, there were serious problems with Cuba's economy, leading to them having to look to new markets. This is a link to a bbc news article:

http://news.bbc.co.uk/1/hi/world/americas/67554.stm

The way that this effects international business is through the collapse of some trade routes, which may have been cut off by sanctions. This could mean that businesses who did trade with certain countries may no longer be able to and therefore lose a lot of business. Also domestic businesses may be more protected by the government using protectionism methods. This is very common in a recession like at the moment where businesses are in a lot of financial trouble.

Governments also effect international business by encouraging bribes on domestic business deals

or through subsidies to encourage businesses to operate in certain areas. Bribes are most commonly found in the arms industry as governments are normally the main customers to this industry. This can be seen as normal in certain countries which have normally got a more corrupt government.

The above are pictures of politics and business effecting international business